Improving Access to Major Agricultural Areas in Mato Grosso do Sul, Brazil

Challenge

While the economy of Mato Grosso do Sul relies substantially on agriculture, two-thirds of its agricultural land is underutilized, in part because of poor accessibility. Several regions of agricultural production with a resident population were either poorly served by transport or inaccessible part of the year. The condition of the state’s transport network caused losses in agro-industrial production, especially in the wet seasons, and the deterioration of the paved network exacerbated the problem of accessibility. Furthermore, regional inequality presented a challenge, as wealth was mainly concentrated within a few of the cities in the state.

Approach

To address these challenges, the Brazil Mato Grosso do Sul State Road Transport Project was designed to respond to the government’s need for financing and its desire to build on the World Bank’s accumulated knowledge from recent road management experiences in Brazil and globally. Additionally, financing was intended to rehabilitate existing selected roads through the introduction of a new results-based contracting method for rehabilitation and or/maintenance, known as CREMA.

Finally, the project aimed to strengthen the government’s capacity to improve public-administration efficiency in planning and managing infrastructure programs, modernizing the environmental management system for assessing infrastructure projects, and consolidating the state’s capacity to attract private-sector participation in infrastructure. 

Results

The project contributed to improved efficiency of the state road network through the following major outputs achieved by June 30, 2016, the closing date of the project:

·         A total of 799 kilometers of paved road were rehabilitated and 454 kilometers of existing unpaved roads were surfaced.

·         The CREMA concept was introduced through the five-year contract, signed in 2012, for the pilot road section of 79 kilometers. CREMA is a performance-based road maintenance and rehabilitation contract, in contrast to conventional contracting, and it is expected to provide sustainably better cost efficiency and improved road quality.  

·         Efficient management systems were introduced for Mato Grosso do Sul’s public-sector management systems for government investments, and the legal and operational groundwork was laid for implementing Public Private Partnerships (PPPs), a more efficient environmental licensing process, and integration of a large amount of rich and diverse data for display in spatial format.

As a result of the above outputs, the project achieved the following outcomes:

·         Vehicle users experienced a 23.8 percent reduction in operating costs (per average vehicle per kilometer) on the state network through the rehabilitation and paving of the state roads, resulting in reduced transport costs for agricultural products.  

·         Use of the road transport infrastructure on the project roads increased 73 percent.    

·         The proportion of the state’s paved roads in good condition increased from 49 percent in 2008, with a network length of 3,500 kilometers, to 82 percent for a network length now of 4,400 kilometers, including 1,253 kilometers rehabilitated or surfaced under the project.

·         Capacity-building of the state government’s public-sector management contributed to improved efficiency and sustainability of the infrastructure investment programs. 

Bank Group Contribution

The World Bank, through the International Bank for Reconstruction and Development, provided financing in the amount of US$ 300 million in 2010 to respond to the government’s request for support of its program to rehabilitate paved roads, surface existing unpaved roads, and build institutional capacity.

Partners

The project was financed by a Bank loan and cofinanced by the Mato Grosso State government. The state government demonstrated strong commitment and collaboration throughout the project period, resulting in a very successful implementation of all aspects.

Moving Forward

Recognizing it as crucial to reduce logistical costs for its agricultural sector, the Mato Grosso State government continues to focus on rehabilitating and paving the state road network through investments identified in the State Plan for Logistics and Transport, financed under the project. Going forward, the state will concentrate on mainstreaming the achievements under the project, emphasizing maintaining or building (i) the capacity acquired to manage civil works contracts, including pavement management systems; (ii) successful practices and approaches for better management of the social and environmental aspects of civil works; and (iii) private-sector participation in and adoption of innovative contracts, such as long-term performance-based contracts and PPPs.

Beneficiaries

The project directly benefited all road users through reduced road operating costs and shorter travel times and their associated costs. Main beneficiaries are those working in the agro-industry, as these roads pass through the state’s major agricultural areas. Better connectivity and improved access to markets contributes to increased efficiency in agricultural production. Furthermore, the entire state of Mato Grosso do Sul and the country as a whole will see indirect benefits from the project’s positive impact on the capillarity of the state road network and thus on competitiveness, employment, and economic growth. Finally, the institutional strengthening component is expected to have a widespread impact on the entire population through improved public-sector management and more efficient environmental management.